The New Zealand Dollar lost another half cent overnight as a stronger USD, widening US-NZ interest rate differentials, and further weakness in emerging market currencies all weighed on the Kiwi. Both the NZD and AUD fell to their lowest levels since March 2016, with a risk-off tone returning to markets with global bond yields higher and global equities falling. All NZD cross rates begin the day lower, with only the NZD/AUD remaining reasonably steady.
Market attention is squarely on tonight’s US non-farm payrolls data. Recent US data has been strong showing a robust US economy, suggesting that recent Fed rate hikes have not yet had a material impact on slowing the US economy. This has strengthened the case for more tightening from the Fed, with markets now taking Fed projections of 3 rate hikes in 2019 more seriously. Non-farm payrolls is always a keenly watched number, and tonight’s report is no exception. Market expectations are for a gain of 185,000 jobs, and given the recent strong economic data out of the U.S there will be many expecting a higher number.
The Pound was stronger overnight with the UK preparing to make a new proposal on the Irish border. Reports are that the new approach will “make finding a compromise possible”. The stronger Pound and weaker NZD has seen the NZD/GBP cross rate fall to a 2 year low.
No local data today, although there is Australian Retail Sales numbers out this afternoon which has the potential to indirectly impact the NZD. Other than that the Kiwi will continue to take direction from international developments, with tonight’s US non-farm payrolls being the next big event.
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